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Once again the U.S. monthly employment condition caught the markets, or specifically the analysts, out in regard to the negative numbers that were reported in the Non-farm payroll, initial jobless, and unemployment rate detail.
The Trough part of the global business cycle takes a while to get out of, and while the sentiment may be changing, the fundamental releases take a long time to make up the lag factor between optimism and reality aligning.
The 467,000 jobs lost in the Non-farm sector was 40% higher than the consensus opinion, and that was what helped to create volatility in the global market, as fair value on growth, interest rates, and commodities were all re-aligned. The equity markets and the dollar jostled around as the scramble to find support and resistance went into full gear. Wall street equities moved lower by an average 2%, the dollar index gained 1% from yesterday's close, and gold and oil dropped a combined 5%.
There is little wonder that the market cannot get global interest to move prices in any market, in any direction, when the future outlook is as blurry as the analyst and forecasters are making it. Fair value is as elusive right now on any given market than it has ever been, and until a reality check of expectancy is put in place the continual stair-step up and elevator ride down will dominate.
How can ever-increasing weekly jobless numbers, and increasing national unemployment rates hitting 10%, lead to the private ADP and public NFP numbers being expected not to post similar numbers to the previous months bloodbath in job losses, TheLFB Trade Team asked. It is a rhetorical question, but short, sharp bursts of order flows that break up a choppy market, and then reverse as quickly as they hit are what we have here, and it is down to the weight of expectancy that the Analysts are building into things.
The reaction is not good to look at when we see 2% drops in S&P values, and the Usd being bought as the hedge. It frustrating to look back on and then have to ask what the 40% gain in equities from March to June was built on, and what real support does it now have to hold. Right now there are so many more questions than answers regarding the economic ability of the U.S. to easily build growth at a rate that matches the debt burden on the other side, the Trade Team added.
The employment numbers are another confirmation that the Usd, the U.S. economy, and the global market place are far from the green shoots of recovery that some are hailing. It will take time, it will be hard, but it will also be worth while if a solid foundation is built from a period of economic down-turn that most will want to soon be behind them. It will not, however, be built from expectancy in what is to come, it will be built off the reality of what is.